Nifty tops 11,200, recoups last week’s losses; should you buy? Check next resistance, support levels

With the Nifty 50 recouping losses and making a strong comeback in the previous session and on Monday, it has now once again breached the 11,200 mark. Analysts believe that the index could face some resistance soon which may push the benchmark back to last week’s lows. So should investors rush back in or wait for another opportunity to start buying again? “Buying, if any, should be kept highly stock and sector-specific. Buying may be done at current levels upto 11400-11450 zone,” said Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst, Gemstone Equity Research & Advisory Services, told Financial Express Online. Milan Vaishnav believes that markets could face resistance around 11,350 levels.

After bouncing back from 10,800 levels, Nifty has now made a strong comeback violating a crucial zone on the weekly charts. “This is made of 50-Week MA and 100-Week MA which are currently placed at 10937 and 11067, respectively. After violating this crucial pattern support zone, the NIFTY has managed to crawl just near the 100-Week MA. We would also be ending this week as well as the month in between; any lower levels at monthly close will likely mark a potential short-term top in place,” Milan Vaishnav added, while saying that upsides will continue to remain capped. Support for the index comes at 10,930 and 10,810 levels.

The benchmark index finds resistance around 11,300-11,350 levels. “Until those levels are crossed on a closing basis, the index continues to remain bearish. The risk reward at this point in time is favourable as traders could strategize short positions for a target of 10750 and a stop loss around the 11350 level,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

Although the upward trend has moved the benchmark higher, analysts at HDFC Securities say that the present upside bounce could be considered as a pullback of a down trend. “Further upside bounce towards 11300-11400 levels could be a sell on rise opportunity. The expected decline from the highs is likely to retest the recent lows of 10800 in the near term. Immediate support is placed at 10900,” the added. On the other hand, analysts at ICICI Securities find Nifty’s upwards trend capped at 11,500 level with strong support at 10,800 levels.

Going by his stock specific and sector specific approach, Milan Vaishnav suggests caution while chasing the momentum. “Buying should be kept limited to defensives like consumption, pharma and IT. The top picks can be Divis Laboratories, Aurobindo Pharma, ITC, Hindustan Unilever, TCS and Infosys,” he added.